Mahindra targets fundraising in electric vehicles push

New Delhi — Indian carmaker Mahindra & Mahindra is in talks with global investors to raise $250m-$500m to accelerate its plans to build electric vehicles (EVs), a source with direct knowledge of the matter told Reuters.

Mahindra is in early talks with global green funds and private equity firms, the person said, adding that it wants a long-term investor who can help build out its EV business.

Some investors, however, have shown interest in recent months in participating in a funding round of about $800m, two banking industry sources said, adding that they have held talks with the company about such offers.

While Mahindra is not actively looking to raise a higher amount than $500m, it is not closed to the idea of raising the deal size depending on the terms and valuation, the first source said.

“Mahindra wants to bring a benchmark investor on board but does not want to dilute a large stake at present,” he said, adding that these plans are at an early stage and subject to changes.

Mahindra’s new EV unit for which it is raising the funds was valued at $9.1bn in July after its first raise of $250m from British International Investment (BII). It was not immediately clear what valuation the investors are offering or what the company is seeking for the new round.

Mahindra told Reuters in a statement it has committed to investing $500m in the electric sport utility vehicle (SUV) space along with BII, and that the two companies will work together to bring other “like-minded, climate-focused investors” into the EV unit.

The talks come weeks after Mahindra outlined an ambitious plan to launch five electric SUVs over the next few years and is targeting such models to make up 30% of its total annual SUV sales by March 2027. The carmaker’s first electric SUV is expected to be available for sale in January.

The funds will help Mahindra build a war chest to compete against rival Tata Motors, which dominates India’s nascent electric car market.

Last year Tata raised $1bn from TPG’s Rise Climate Fund for its EV unit at a valuation of $9.1bn, making it the first major clean mobility deal in India.

In India, the world’s fourth-largest car market, electric models make up just 1% of total annual car sales of about 3-million units. The government wants to grow this to 30% by 2030 and is offering companies billions of dollars in incentives to build EVs and their components locally.

Mahindra has partnered with Germany’s Volkswagen to procure components such as electric drivetrains and batteries for its electric SUVs, and the two are exploring joint vehicle projects, building battery cells locally and developing charging solutions.

The Indian caromaker has said it is open to making some investments in a battery maker to secure future supplies, and is also evaluating the need to set up manufacturing capacity for EVs, according to local media reports.

Mahindra’s fundraising comes at a time when there is growing investor interest in India’s clean mobility transition resulting in “more money chasing few assets”, one of the two banking sources said.

Some of the investor interest is a spillover from Mahindra’s first fundraise, a third banking source said.

Reuters